EURUSD: watch for the PCE
November FOMC meeting minutes were released during the previous week, where it has been revealed that the Fed has no appetite for rate cuts at this moment. This comes as a result of concerns that inflation might be persistent in the coming period, and as long as they don’t see that the inflation figures are clearly indicating a path toward the targeted 2%, rate cuts will not be on the table. On the opposite side are market expectations which are currently pricing 0% chance that the Fed will further increase interest rates, while the first rate cut might occur in May next year. From other economic indicators released during the previous week, Durable Goods Orders dropped by -5.4% in October compared to the previous month, much higher from market anticipation of -3.1%. Michigan Consumer Sentiment final for November was standing at 61.3, higher from forecasted 60.5.
HCOB Manufacturing PMI Flash for November for Germany was 42.3, higher from forecasted 41.2. GDP growth rate final for Q3 for Germany was -0.4% lower from -0.3% expected by the market and revised 0.1%. At the same time, the IFO Business Climate index for November for Germany was 87.3 in line with the forecast. There have not been significant indicators published for the Euro Area during the previous week.
Considering that there have not been many currently important indicators published during the previous week for both USD and Euro, the currency pair was moving within a relatively short range. Highest-lowest range of the pair was 1.096 down to 1.085. The market has a bit slowed down, to test potential at current levels. The RSI index reached a clear overbought side during the week, which indicates a potential for a short term reversal in the coming period. Moving average of 50 days continues to converge toward the MA200 counterpart, but as there is still a relative distance between two lines; chances for a potential cross are decreased at this moment.
Current charts are pointing to a high probability for a short term reversal in the coming period. Still, the resistance line at 1.10 was not clearly tested during the previous period, which leaves some space for a potential move of the currency pair toward this level. Still, it should not be expected that the 1.10 line will be clearly breached. On the opposite side, in case of a short reversal, the currency pair might return to the level of 1.08 to test it for one more time. Higher volatility during the week should be expected at the time of the release of US GDP figures and especially the PCE Index.
Important news to watch during the week ahead are:
Euro: GfK Consumer Confidence for October for Germany, Inflation Rate preliminary for November for Germany, Unemployment Rate for November for Germany, Euro Area Inflation Rate flash for November
USD: CB Consumer Confidence for November, GDP Growth Rate second estimate for Q3, PCE Price Index for October, ISM Manufacturing PMI for October, Fed Chair Powell Speech
HCOB Manufacturing PMI Flash for November for Germany was 42.3, higher from forecasted 41.2. GDP growth rate final for Q3 for Germany was -0.4% lower from -0.3% expected by the market and revised 0.1%. At the same time, the IFO Business Climate index for November for Germany was 87.3 in line with the forecast. There have not been significant indicators published for the Euro Area during the previous week.
Considering that there have not been many currently important indicators published during the previous week for both USD and Euro, the currency pair was moving within a relatively short range. Highest-lowest range of the pair was 1.096 down to 1.085. The market has a bit slowed down, to test potential at current levels. The RSI index reached a clear overbought side during the week, which indicates a potential for a short term reversal in the coming period. Moving average of 50 days continues to converge toward the MA200 counterpart, but as there is still a relative distance between two lines; chances for a potential cross are decreased at this moment.
Current charts are pointing to a high probability for a short term reversal in the coming period. Still, the resistance line at 1.10 was not clearly tested during the previous period, which leaves some space for a potential move of the currency pair toward this level. Still, it should not be expected that the 1.10 line will be clearly breached. On the opposite side, in case of a short reversal, the currency pair might return to the level of 1.08 to test it for one more time. Higher volatility during the week should be expected at the time of the release of US GDP figures and especially the PCE Index.
Important news to watch during the week ahead are:
Euro: GfK Consumer Confidence for October for Germany, Inflation Rate preliminary for November for Germany, Unemployment Rate for November for Germany, Euro Area Inflation Rate flash for November
USD: CB Consumer Confidence for November, GDP Growth Rate second estimate for Q3, PCE Price Index for October, ISM Manufacturing PMI for October, Fed Chair Powell Speech
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